Nurseries must 'innovate' to make funding work, childcare minister says

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Nurseries should make more use of ‘economies of scale’ to offer parents more affordable childcare, Sam Gyimah has said.


Childcare and education minister Sam Gyimah: ‘Providers need to structure their costs so that paid-for places are not cross-subsidising'

The childcare and education minister said that more early years settings should move towards the 1:13 ratio and that it was important for them to ‘innovate’ to drive down costs for parents.

While nurseries that employ graduates can operate with one staff member caring for 13 three- to-five-year-olds, he said most favoured a 1:8 ratio.

Nurseries also tended to have spare capacity on Mondays and Fridays when they were less busy than at other times during the week so the minister wondered ‘whether more could be done in terms of innovation’ to save parents money.

Mr Gyimah was giving evidence to the House of Lords Committee on Affordable Childcare.

He suggested that PVIs should collaborate more with schools, using some of their advantages to help make childcare more affordable.

Comparing school provision with that of a small PVI provider, he said that schools do not pay business rates, may have more space and could deploy staff resources more effectively, and that if this were replicated it could bring down costs.

PVIs were good at being receptive to the market, for example opening 8am to 6pm.

He also said, ‘You can talk about schools and still be pro-childminders and pro-nurseries.

‘The ultimate arbiter is the parent and parents choose the setting that works for them.’

When questioned by the committee about concerns about insufficient funding for the free entitlement and that parents were effectively subsiding funded places by paying more, Mr Gyimah said that he was ‘very familiar with the argument', but that he treated some research ‘with caution’.

Although he did not name the research in question he appeared to be referring to that commissioned by the Pre-school Learning Alliance published earlier this month.

‘Providers need to structure their costs so that paid-for places are not cross-subsidising,’ he said. ‘There are settings that only deliver the free entitlement that are thriving.’

Referring to the different rates that local authorities pay providers he said, ‘We publish the [early years] benchmarking tool and we will analyse it and take appropriate action.’

Mr Gyimah also said that he did not believe that there was an appetite among early years providers to offer more than 15 hours a week, because it would limit their ability to offer paid-for places.

‘I don’t detect enthusiasm for settings to provide more [free entitlement] hours,’ he said.

Labour has said that it would offer 25 hours of funded childcare a week.

Pressed further by the committee’s chair Lord Sutherland who said there had been ‘fairly insistent submissions from providers about the undersupply’ of funding, Mr Gyimah acknowledged that the hourly rate had been frozen for the past two years, citing ‘austerity’.

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